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The election of Donald Trump shocked pollsters and many voters. With the dust starting to settle, it appears that a big part of what got overlooked was the depth of continued economic stress in many pockets of the country. For many observers the increasingly positive — if less informative — statistics on national unemployment seem to have passed over an outsized group of voters whose prospects for employment, income growth and personal wealth have been profoundly eroded. From urban centers to mid-sized cities and small towns, particularly in the Rust Belt, the Great Recession of 2008 has imposed a lasting toll. Trump’s successful campaign promises to restore prosperity for them. Amy Castro Baker, a professor at Penn’s School of Social Policy & Practice, discussed these issues on the Knowledge@Wharton show, part of the Wharton Business Radio network on SiriusXM channel 111.

An edited transcript of the conversation follows.

Knowledge@Wharton: What was your reaction to the presidential election?

Amy Castro Baker: Stunned is the word I would use. As a social scientist, I am fascinated by the numbers, fascinated by the trends, fascinated by what we expected to see numerically and what did not occur. But as a professor, as someone who is mentoring and advising students, I wear a different hat. When I arrived on campus the morning after the election, for instance, there were students who were visibly upset. My immigrant students were wondering, “What does this mean for my family?” One person asked me rather pointedly, “Does this mean my family will be deported?”

I think there are two sides to it. On one hand, I can look at the numbers and say okay, from a social science perspective, this is fascinating. On the other hand, there are some real human implications behind some of the dialogue that’s taken place over the last year. And I’m fascinated by both sides.

Knowledge@Wharton: Let’s start with the numbers. In the weeks before the election, the polls consistently had Hillary Clinton over Donald Trump by anywhere from two to six points, and they couldn’t have been more wrong. Interestingly, Hillary Clinton won the popular vote but not the electoral college.

Baker: I’m not a pollster, so it’s sort of stepping out of my area of expertise to conjecture. However, I think some of where that is coming from is the fact that we have so many new voters. The other question I really have is going back to conservatives who had been saying they were going to vote for Gary Johnson or Jill Stein, and the numbers just weren’t there. That tells me one of two things: They were planning for voting for Trump all along and just didn’t want to be public about it, or they changed their mind at the last moment. Either way, there’s something about the narrative of the election that I think probably made folks unwilling to be really public about who they intended to vote for. That’s sort of my best guess.

“We have clearly had a market recovery since 2008. However, we have not had a human recovery.”

In terms of the data, I’m not surprised as somebody who studies the working class. They’ve been absolutely eroded in terms of wealth and pay, and they have not recovered yet from the Great Recession, the housing crisis. The numbers are pretty clear on that.

Knowledge@Wharton: There were two core areas that you had to focus on to see the path to the election of Donald Trump. It was the Appalachian Trail area: western Virginia, West Virginia, Kentucky, Tennessee and North Carolina. Then the Rust Belt area: Pennsylvania, Ohio, Michigan and Wisconsin. Those are all people who were middle class 15 or 20 years ago, but have been affected by the economy.

Knowledge@Wharton High School

Baker: Absolutely. The way that I talk about it in my research is that we have clearly had a market recovery since 2008. However, we have not had a human recovery. The neighborhoods, the communities, the rural areas have not recovered. I specifically study housing. Even when we look at the housing bounce-back, we’re seeing housing sales rising, we’re seeing movement in that market. However, it’s not in those places and spaces.

We’re talking about people who have worked hard their entire lives, feel as though they’ve played by the rules, and they’re losing. In my work, what I’m seeing is an extreme asset depletion just as folks are hitting older adulthood. They’ve expected to hit that empty nest stage in life and have something to fall back on. Instead, they’re fighting the recovery on two fronts in terms of the loss of their home equity and loss of jobs. They are sort of trapped on both sides, and I think there is something about Trump that speaks to that.

Knowledge@Wharton: You also have young adults who have recently graduated from college who are still living at home or renting because they cannot afford or don’t want to buy property right now. That’s a dynamic in the housing sector right now that I think the building companies and others are still trying to figure out.

Baker: You could not be more correct about that. We have this gap in the market in terms of housing. Right now, 55% of Americans are spending more than half of their income on rent, mortgage and utilities. That’s astounding. The rule of thumb in real estate is 30%. It’s not as though people’s eyes are bigger than their wallets. That’s not really what we’re seeing in the data. What we’re seeing in the data is that there’s a lack of affordable housing. Housing is sucking up all those extra resources that in the past would have gone towards savings, towards asset accumulation, towards building wealth that will protect people as they’re aging.

As someone who specifically studies underserved populations, what I’m really worried about are the low-income people who have always been on the bottom. We’re talking a lot about the middle class. We’re talking a lot about the working class. That’s important. That’s crucial. It’s clearly played a role in the election. However, we also have to ask the question, “What about the folks who have always been at the bottom?”

Knowledge@Wharton: The Democratic Party expected a lot of those people to come out and vote, and they were the ones who didn’t. In Philadelphia, in inner-city Detroit, in Cleveland, Milwaukee. Those are the people that fall into that category that you’re talking about.

Baker: Yes. When we look at the language that surrounded the election the past year, we’ve heard a lot about jobs. We’ve heard a lot about issues of immigration, issues of employment. But we haven’t been talking about the people at the bottom. That’s really a problem.

In my research, I have new work that’s coming out that shows that older African-American women have lost 97% of their wealth from the beginning of the housing crisis until 2012. And we’re not talking about that. So, what motivation do they have to get to the polls when we’re not talking about the extreme issues of poverty that people are living with and dealing with? Even just on a practical matter, when you’re working multiple jobs and juggling multiple things, their concerns have not been brought to the forefront. I can’t say empirically, but my guess is that’s a disincentive to get to the polls.

“What we’re seeing are a real erosion of assets and wealth. People just don’t have things to protect them in the economy anymore.”

Knowledge@Wharton: We have seen a bounce-back if you look at the monthly job numbers from the U.S. Department of Labor. But we’re still fighting an uphill battle from where we were 10 years ago. We’re at about the same level pay, but the cost of everything has skyrocketed.

Baker: Exactly. Pay has stagnated, while at the same time the cost of living is going up. We talk a lot about wage gaps and pay gaps, but it’s really more about a wealth gap. We’re talking about communities of people, both in those rural areas that came out strong for Trump and also in the city, where historically folks have voted for the Democratic Party. What we’re seeing are a real erosion of assets and wealth. People just don’t have things to protect them in the economy anymore.

Knowledge@Wharton: One of the ballot initiatives that was bounced around in a few states involved an increase in the minimum wage. A couple of states bumped up their minimum wage. What do you think is the level effect of those moves?

Baker: It’s difficult to say because we don’t have enough data moving forward yet to know how much of a bump that’s going to give people. It absolutely helps when people have more money in their paycheck. But again, going back to that housing piece, when people are spending around half of their income on housing, there’s not much left for anything else, even at $12 an hour.

Knowledge@Wharton: Is this going to end up being a lost generation because of the people who had wealth in their 40s and 50s when the recession hit, they’ve had to stay working longer because of this? Are we not going to see this really bounce back until the millennials get to be in their 40s and 50s?

Baker: The optimist in me says, “I hope not.” But at the same time, it doesn’t appear that they’re not going to be a lost generation. I think in a way, they probably are going to be. As a researcher, part of what I look at is not just the individual balance sheet, but who’s relying on that balance sheet. If we’re talking about a single woman or a single man, who is relying on that income? Who are they caring for? Are they caring for aging parents? Do they have kids leaving college? Do they have nieces and nephews that they’re responsible for? When there’s just less there for them to buffer against market risk, we don’t really know how we’re going to pay for it.

“There is no state in the United States where someone can afford median rent on the minimum wage.”

One of the things that I’ve seen in my work, and others have seen as well, is that because folks are working in sectors of the economy that are really hard on the body, they’re being diagnosed with diseases much earlier than they would be otherwise. They’re essentially becoming disabled earlier in life, but before they’re eligible for things like Medicare. When we look at the numbers of who came out strong for Trump, I’m seeing things line up there in terms of whether or not people are aging and whether they have access to medical care and supports that they need.

Knowledge@Wharton: California is probably a world unto its own with the way that housing prices have soared there. Even renting is a challenge there these days.

Baker: We’re seeing similar dynamics in other parts of the country. There is no state in the United States where someone can afford median rent on the minimum wage. It’s not possible. Those issues are at play everywhere.

Right now in the United States, in 151 zip codes, at least 50% of all mortgages are underwater. What we have is a stagnant housing market where people are trapped. They’re owing more on their homes than the property is worth, which is really a problem. As far as the generational aspect of it goes, the question to me is, what’s going to happen to the tax base? When people cannot afford to buy a home, what we’re doing is eroding how much money is left over for other things.

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8 Comments So Far

Brian Peeler

Having lived in Western North Carolina for most of my life, I can provide a first-hand account for why people voted for Trump. In 1990, most households had one or two adults with a “good job” making $15-$20 per hour in the furniture or hosiery manufacturing sector, or other heavy industry, or one of the supporting businesses (trucking/logging/services, etc.) For these people, this provided a good little life, providing enough income to buy a small home, have a week’s vacation in Myrtle Beach or DollyWoood, support the local high school football team, and go to Church on Sunday.

Then NAFTA and China MVN trading status was signed into law. Within 10 years, 70% of the manufacturing was eliminated from the tri-county area where I lived. Factory buildings were ghost towns. What few buildings were occupied, were just used for logistics for Asian and Mexican built furniture. People were forced into unemployment, minimum-wage service work, faking injuries to try for disability, “retraining” programs, etc. I actually went to community college where people in their 50’s who have done 8-way-hand tie operations on sofas for 25 years being asked to retrain to run a heath care office!

Two Administrations later (Republican and Democratic) these areas are still a wasteland. There is a lost generation of workers here. Younger people have little hope because they are not college material. To these people, Democrats just offer a handout and Republicans have been all talk and no action. Minimum-wage jobs for older workers are demeaning, because these types of jobs are meant for kids to learn how to function in a work setting. You are supposed to “get a better job” after high school.

Trump’s campaign struck a chord with these people. Finally, someone is listening and saying what they think. Typical Democratic supporters voted for Trump because he campaigned on “bringing back manufacturing jobs” which these industrial workers and the ‘Union Man’ used to be Democrats main backbone support in the South and Rust Belt. The Democrats have abandoned these people to chase other demographics and champion other social causes.

In end, “It’s the economy, stupid.”

Brian Peeler

And don’f forget, these are the people the President Obama called, “Bitter clingers to their religion and guns.”

Kim Slocum

The most ironic part is that having voted for these things, “Middle America” won’t get any of it. The manufacturing jobs were lost far more to automation than trade and aren’t ever coming back. Trade barriers will simply erode purchasing power. The Economist forecasts that lower income Americans will be 63% poorer if the tariffs Trump talked about on the campaign trail ever get enacted. Wage inequality is likely to get a lot worse since the Republicans have traditionally opposed any sort of minimum wage. The preferred Republican solution for health care is high deductible plans which already cause about half a million bankruptcies each year. Ought to be a fun four years…not.

Dwayne Lindsay

Another “surprising ” (at least to the intelligentsia) election result was the number of college educated white males who voted for Trump.
While some of this was probably down to “PC fatigue”; overall the corporate obsession with “Fit”,which covers a whole host of vaguely discriminatory practices, degree inflation and overt ageism has made employment difficult for multiple generations of educated men, especially those who only hold a bachelor’s. Life becomes a dreary slog of temporary, part time, adjunct, contract positions that often pay less than a livable wage, (if they are not “unpaid internships’) offer few if any benefits, little stability, and no chance for advancement. These men have “done the right things” and find themselves in many ways no better off than the guy who squeaked out a high school diploma. The concept that a college degree indicated a level of grit and intelligence that would allow a man to do what ever task his employer set for him has been lost in a shift to seeing college as a four year vocational program, that trains a person for a specific job. We are putting a immense amount of talent either on the back burner or out to pasture, and when you feel you have run out of choices you do what you can.

Anonymous

Thanks. I didn’t follow the logic on housing prices. On the one hand, people in middle America are suffering because their houses have lost so much equity since the recession. That means housing prices have fallen. On the other hand, people are suffering because housing isn’t affordable — the prices are so high that it takes up half their income. Please explain. Have housing prices fallen enough to put many houses underwater, but not enough to ease the longstanding affordability crisis?

Gary Cassidy

Hi. Found the article really interesting. Looking at much of the post election analysis through my ‘down under’ Australian lens still leaves me confused as to why Trump won. I understand that focussing on the disenfranchised ‘swinging voters’ explains why Trump got across the line. What leaves many outside the US dumbfounded is why all those who are not swinging voters (almost half the American voting population) decided to elect a person with Trump’s values and ethics? Why did all the Republican’s who were expected not to vote decide turn out? Surely that is the key issue.

Joe Willis

From the article: “There is no state in the United States where someone can afford median rent on the minimum wage.”

We hear this kind of expression frequently as if it’s something shocking. Minimum wage is the lowest possible legal amount a person could earn (primarily of use for ‘first jobs’ or people looking for easy spending cash). Why would anyone expect that the lowest amount of money you can earn would, in any real world scenario, pay for a median residence?

Guess what? Minimum wage would get you an expensive car, luxury vacations or a partying lifestyle either.

Je Ya

Glad to read article! Thanks for being honest and unbiased.

Jobless factor is only one of many reasons that people voted for Trump. Another popular reason is that way too many illegal allens are not punished but treated using our welfare paid by US citizens.

Other reasons include ISIS threat, huge trade deficits by China, Muslim flooded world-wide, Democrats repeatedly lying and humiated Trump and his supporters, Clinton immoral ethics to her job, especially Obama couples’ horrible words to Trump supporters as US president are the key factor to drive many democratic members to leave for Trump. Jesus is living in USA!